Music Industry · Sales

How to find salespeople for a music-industry SaaS product?

Paul Loeb Founder, DropTrack

January 20th, 2016

I have a music/tech startup called DropTrack. It's marketing software for the music industry. (Think Mailchimp + Soundcloud). The company is profitable with recurring revenue, and I have 5,000 users; a mix of free and paid customers. I've experimented a bit with paid advertising and got my acquisition cost (of a free user) down to about $2. Which sounds great, but not many of those free users are converting to paid customers. 

Based on this discussion and Dwayne's great answer, I was thinking what I really need is a good salesperson. My hesitation is that the company isn't yet generating enough revenue to cover a salary, so the sales position would be either based on commissions, equity, or some other sort of revenue share. 

Can anyone recommend a good place to look for salespeople in this niche?

Ryan Mattock Co-Founder of Award Winning CommissionCrowd - The Home Of Independent Sales

January 20th, 2016

Hi Paul,

Firstly congratulations, DropTrack looks fantastic!

In all honestly though, you are going to find it difficult, if not impossible to attract independent salespeople to represent your company due to the low deal value.

While your pricing structure is attractive to your customers, in my experience as co-founder of CommissionCrowd, self-employed sales reps typically seek opportunities with a minimum recurring commission value upwards of $500pm.

if you were interested in working with self-employed sales agents I would suggest that your opportunity model would be aligned with brokering large strategic partnerships. Perhaps with the likes of reverbnation.com (if that's not already a service they provide). Independent sales agents will be after these bigger b2b deals.

Nathaniel Peniston Sales & Marketing Executive

January 20th, 2016

Have you tried personally selling? As the founder, you are (or should be) the firm's first sales person. Even if you have not sold before and are terrified of sales and a total introvert it is critical that you get out there and sell. Note selling in this case is simply making calls to prospective customers, listening to why people are not upgrading and if the reason is not valid mentioning why it is not valid. Are they not buying because of cost, features, better competitors, complexity, not enough differentiation between the free and paid versions... what is preventing the sale? Once you have both a proven track record and a sales model, you will know how difficult it is to sell and therefore what you will need to pay / how senior a representative will be required. You may find that with a few tweaks to the cost or features that the product sells itself and a salesperson is not even required.

Paul Loeb Founder, DropTrack

January 22nd, 2016

Thank you all for the great feedback! It's a lot to take in; I'll reply to each of you individually. I can definitely say it was a good decision to sign up for FounderDating! 

Rob G

January 21st, 2016

Paul; here are a few questions that you need to answer before you can make a decision as to how you will sell your product/service:
1. to whom are you selling? : i.e. who do you believe is your ideal prospect? 
1.1 are you targeting consumers or businesses? 
1.2 if b2b then what size? 
2. what is the value of a typical sale:  LTV or NPV? 

Answers to the above will help you quickly decide whether the numbers will even pencil out to support a direct sales model.  I would not recommend going directly to a channel sales model at this stage as you just don't have enough history yet to know what works and what doesn't and how to direct, train, motivate and compensate your channel partners.  You can back into the numbers starting with what a 'good' direct sales person in your industry makes in salary and commission. If you are not offering a base salary to supplement commissions then you need to ad a "ramen noodles multiplier', i.e. 'here's how we will sweeten your comp plan to make up for the fact that you will likely starve until commissions start coming in".  Since you are a startup with presumably limited resources then you need to add a "risk multiplier", i.e. the sales person will have to wear a lot of hats until THEY produce the revenue to allow the company to offload some of the work such as: marketing, sales/demo materials, sales scripts, CRM/opportunity management tools, on-boarding support, etc. Until such time the sales person will have to consume valuable selling time with some of the above activities.  If this sales person does not have significant experience and expertise and contacts in your industry then there is a learning multiplier too. 

i don't know the music business so here's a very rough example using SaaS sales in the tech industry - say you are selling CRM or ERP systems B2B for example.  A "good", not great, not top performer, but not a rookie either sales rep will be expecting to make $150-$200k at target including a base of say, $60-$70k so commission = $80 - $140k. A mature company might pay 15%-20% of the NPV of a sales in commissions, funded startups will likely pay more to allow for the lack of industry name recognition, perceived risk by customers, competitive barriers to entry, etc. Unfunded startups will need to pay even more - let's 30-35%.  So lets say you are an unproven startup with no funding and limited resources and you are not selling in/to the music industry, but instead selling SaaS services to large B2B prospects:  $150-$200k/yr @ 30% commission = $500,000 - $667,000 in paid revenue (assuming you can't afford to pay commissions until cash actually hits the company's bank account).  Add in the risk and ramen and ramp-up multipliers and you are looking at more like 2-3 X these numbers.   I would assume that not all contracts will be paid up-front so that will affect revenue recognition as well as cash on hand to pay commissions - adjust accordingly. So if your sales person sells only your $29.00/month package that would pencil out to somewhere between 1,437 - 1,917 transactions/yr = 120 -160/month = 30-40 transactions/week = 6-8/day = about 1/hr.... 2x - 3x or more considering the multipliers.  You might be able to address some or perhaps all of the risk multipliers with some equity arrangement.  It looks to me like these numbers simply won't pencil out if you want this person to sell your current offering at your current pricing.   Your sales person would be better utilized working on larger B2B deals if that is even feasible with your product.  And of course it may be possible to attract a 'good' sales person at a lower total comp plan too, but i doubt it would be .5x the above example. 

so before you run out and start spending time trying to recruit a sales person you have some work to do to make the numbers work.  You will need to be prepared to share your math with prospective candidates too.  


Jessica Magoch Sales doesn't have to be a dirty word. Get more clients without being icky, sleazy, or just plain annoying.

January 21st, 2016

Hey Paul, 
You might need a salesperson depending on the investment required by the musician, but you should also look at why people aren't converting in the first place. It sounds like they are satisfied with your free product. It's also a tough demographic to get money out of... 
If the commission is high enough (a commission only person should be able to earn 80-100k first year as a starting point and increase from there through renewals), then I see it as a great opportunity.. you have 5000 leads for them! Start by putting together an unbeatable comp plan and network.  BUT don't expect the salesperson to uncover why people are not converting.  It may be that the value of the paid product is not there. : ( 

Dina Moskowitz

January 20th, 2016

Hi Paul, that's really cool.  I love that you've created a verticalized SaaS - that's where we are seeing great traction amongst IT Resellers as it makes it much easier for them to understand its differentiation, and to trust that the application has been designed for their specific client's needs.  If you have an affiliate program, or more ideally if you have an established reseller program (or are willing to put one together - we have the tools to help), I would suggest that you look into SaaSMAX.  We reach tens of thousands of IT Resellers and our primary mission is to match SaaS companies with the right resellers. What's interesting on a side note is that I think quite a few people I've met in the IT Channel are musicians or into music, so it could even become a direct sales channel besides an indirect sales channel.   Best, Dina

Will Robus Co-Founder, Little Green Pencil

January 20th, 2016

Paul, 

I would echo Nathaniel's comments - you really need to be salesperson #1 - for all of the reasons that he mentioned.  Pricing/premium packages/value drivers are really hard to nail for any business.  I have a SaaS for golf outings and I'm currently working through customer acquisition / monetization.  We are very niche - so we are not even considering a freemium model until we are very clear what our monetization model looks like, and then build a scaled go-to-market from there.  After running through all the options mentioned above and some others - it became very clear that I needed to become salesperson #1, and then use the other strategies mentioned to leverage what I learn.

Dina's channel play is very smart, but it's hard to abdicate sales purely to channels - you are still going to have to "sell it" to and through the resellers.  

Good luck - this is the hardest part (checkout the Evernote story) - but it's also the part this is going to make you ultimately successful.

Michele Tivey COO at FinTech Payments Corp, Director CNP-Solutions

January 23rd, 2016

I'm not trying to sell you here, truly, but there are many places in your recurring payments landscape where you may be leaking money. That is to say, you're not using the most cost effective transactional and business strategies to optimize your revenue. My company has a piece of FinTech that addresses these issues at the processing level, but it was developed out of the tools we use with Merchants like yourself. If you'd like to discuss, I'm sure our Founder/CEO would be happy to give you some quick advice ... At no charge, of course. Our clients include Ipsy, Hearst Magazines, Meredith Publishing, and Nationwide Insurance. But weve helped several merchants at the startup phase, like yourself. Sorry I can't help you find a sales person, but I may be able to help you find the money to pay for one. Feel free to email me: MTivey@cnp-solutions.com. And best of luck!!

Judith Hurwitz President & CEO Hurwitz & Associates

January 20th, 2016

I actually might have a lead for you. I know someone who started a music oriented site a number of years ago. The site is struggling to gain more than 5K users. However, the entrepreneur might be interested in working with you. If you email me directly I can put you in touch with him 

Kelly Kuhn-Wallace Tech startup consultant, founder coach.

January 21st, 2016

I'd recommend finding out what is happening in your conversion process before you hire sales. 

If you don't already have an ideal customer profile, get one put together. It sounds like you have product-market fit & enough traction to get this done. Lincoln Murphy just updated his piece on ideal customers. It's a great place to start.

Then dig into your customer data. You'll probably know who in your paid base fits the profile by now. Look at the lost prospects who never converted. Find out why. 

Then dig into your current free users that fit your model. (You may have to survey. Or call them. Or bake them cookies.) Find out why they haven't converted.

Don't forget to look at lead source across all of these groups. Sometimes ideal customers are more likely to come from a particular source. It's rarely that easy, though.

When you have all that data in hand, you can combine in with your time series data for conversion. Look at how many days it takes a new user to reach certain milestones in your app. Compare free users to paid. Look for patterns. Ignore users that aren't ideal. In the long run those data points lie.

You'll then put together some hypotheses about how to increase paid user count. The big ones in SaaS are typically around pricing, onboarding, and retention. In pricing, you might consider not having a free plan at all. You could test offering a free trial, for instance. In onboarding, you could add more guided "milestones" that the app or you walk the user through. I'm going to skip retention because I'm writing a book in a forum post.

You can hire sales help for sure. But you might need customer success help more. There's no way to know that until you do this kind of digging into your customer base. It won't be fun, but it will be worth it.